Amazon ‘s disappointing quarterly results signaled to analysts that even the giants aren’t immune to a macro slowdown. The technology behemoth reported results after the bell Thursday that fell short of analysts’ revenue expectations. Amazon also signaled a slowdown in its Amazon Web Services division, which recorded its slowest growth since at least 2014 , and shared weaker-than-expected guidance for the current period. The stock was last down more than 13% in premarket trading. Analysts trimmed price targets and estimates to reflect a broader macro slowdown at the e-commerce giant following the results, with analysts at Deutsche Bank and Wolfe Research saying it’s time to “batten down the hatches.” However, most analysts remain bullish on the company’s long-term trajectory, maintaining their outperform and buy ratings on the stock. “Combined with wobbles on revenue momentum for both AWS and Retail, and suddenly the Amazon hiding place doesn’t look good,” wrote Bernstein’s Mark Shmulik in a note to clients Friday, believing a “redemption story” is ahead for the company and equating the recent tech meltdown to “trying to turn a big freight ship.” “The good news here is that the story isn’t broken, it’s just pushed out into 2023 while Q4 may get worse before it gets better… pretty much Google 2.0,” the analyst wrote. That said, analysts across the board trimmed price targets and estimates to reflect the broader macro pressures. Goldman Sachs analyst Eric Sheridan said in a note to clients Friday that the bank remains a believer in the company’s long-term trajectory and its cloud computing business despite the results. He trimmed the company’s price target to $165 from $175 a share, suggesting a near 50% upside for the stock. “Based on our work, we remain convinced in a multi-year operating income margin expansion story for Amazon on the back of improved eCommerce margins, less International losses & higher profit margin mix contribution from AWS and advertising,” he wrote. RBC Capital Markets’ Brad Erickson called the company a “long-term secular winner” with strong earnings power and margin leverage once it can overcome macro pressures. Despite current setbacks expect Amazon to resurge as a winner coming out of a recession, said Morgan Stanley’s Brian Nowak in a note to clients Friday. “AMZN is seeing the consumer/enterprise slowdown more than thought, leading to lower rev and a flatter slope of volume-based efficiencies,” he said, reducing his price target to $140 a share. “But we think AMZN is positioned to take share through a downturn, see forward investment levels low, and the potential for cost rationalization.” Bank of America’s Justin Post said the weak outlook at Amazon may also signal that the feared recession looming ahead is already underway. He trimmed his price target on the stock to $137 from $157 a share, suggesting 23% upside ahead for the stocks. “It is evident from the 4Q guide that AMZN is not immune to the challenging macroeconomic environment worldwide,” said Wolfe Research’s Deepak Mathivanan in a note to clients. “However, we think the company is well positioned to navigate a choppy demand environment with minimal disruption to operations and potentially gain share from sub-scale players.” Shares are down more than 33% this year. — CNBC’s Michael Bloom contributed reporting
Analysts remain confident in Amazon long term as shares crater, expect ‘redemption story’ ahead
